Thu. Oct 28th, 2021

Strong Earnings and Omnichannel Approach Keeps JD.Com News on Growth Path

The JD juggernaut just keeps rolling along. China’s premier e-commerce retail site, JD.Com, reports that its 2020 second-quarter earnings were up a robust 33.8% year-over-year. That translates to revenue of $28.5 billion, or 201.1 billion RMB.

A leading sector was general merchandise. It accounted for $9.1 billion in sales. That represents an increase of 45.4% over the second quarter of 2019. It was also the highest rate of growth during the previous nine quarters. Some of these gains are attributed to increased shopping on digital platforms driven by the effects of the COVID-19 pandemic. Chinese consumers turned in droves to remote shopping as they locked down, quarantined and otherwise pitched in to mitigate the effects of the novel coronavirus.

Many other factors contributed to increased sales as well, however. For example, JD.Com (also known as Jingdong) has been moving aggressively to build partnerships with premium brands from around the world. A-list firms like Prada, Tom Dixon furniture, Sergio Rossi shoes and Daikoku are just a few examples of new flagship stores that opened for business on the JD platform. Daikoku is a Japanese brand.

Another closely watched category is the number of active users of the JD site. That figure soared well past the 400 mark and now stands at more than 435 million active users. This category increased by nearly 30% over 12 months. It’s the highest growth rate in 12 quarters.

In other news, internal marketing data shows that a primary area of active user growth has come from lower-tier cities. In fact, about 80% of all new business was garnered from these locations. JD.Com CFO Sandy Xu explained that a specific and sustained campaign that focused on efforts to increase user engagement in lower-tier cities paid off with attractive numbers. It also helps that JD’s ongoing efforts to bolster its supply chain, distribution and logistics capabilities make getting products into the hands of end-users in these cities more efficient than ever.

An interesting aspect of the current marketing strategy is one that recognizes the importance of traditional retail as combined with digital retail methodologies. JD has not abandoned the concept of brick-n-mortar locations. The latter offers customers the enjoyable experience of walking into an attractive location and shopping for products in a way that is immediate, real, sensory-oriented and vivid as compared to online shopping.

A primary brick-n-mortar operation for JD are its food supermarkets, the 7FRESH chain. Two new 7FRESH stores opened recently in Chengdu, a huge city with a population of 16.3 million. Chengdu is the capital of southwest China’s Sichuan province. The addition of these two locations brings the number of 7FRESH locations to 20. One of the new Chengdu stores encompasses more than 8,000 square meters of floor space. The first floor is dedicated to food products and catering services are on the second floor.

Additionally, 7FRESH store products can be accessed remotely using the 7FRESH app that can handle deliveries in 30 minutes or less in most cases. This is a classic example of the omnichannel approach that JD.Com has embraced in a big way.

Finally in news, the JD Health brand has seen its medical consultation business grow by an amazing 400%. As more people became aware of this service, they showed a strong willingness to overcome the resistance of trying something new. That, in turn, helped consumers become familiar and accustomed to obtaining healthcare services in this innovative way of delivering traditional health and well-being products.

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